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Closing Bell

News/Business. Maria Bartiromo, Bill Griffeth. A guide through the most important hour of the Wall Street trading day. New. (CC) (Stereo)

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01:00:00

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San Francisco, CA, USA

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Comcast Cable

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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528

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480

TOPIC FREQUENCY

Us 16, Oracle 14, S&p 11, Ben Bernanke 6, Nick 4, Ibm 4, Dell 4, Eric 4, Zuckerberg 4, Mark Hurd 4, Jackie Deangelis 3, Citi 3, Humana 3, Anna Schwartz 2, Rick Santelli 2, Activision 2, Paul 2, Bob Pisani 2, Schwab 2, Meg Whitman 2,
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  CNBC    Closing Bell    News/Business. Maria Bartiromo, Bill Griffeth. A guide  
   through the most important hour of the Wall Street trading day....  

    October 1, 2012
    3:00 - 4:00pm EDT  

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i know. hi, everybody, we enter the final stretch for the trading day with a trip l digit gain in the dow. welcome to this special edition of "the closing bell." i'm maria bartiromo coming to you live from san francisco. first trading day of the fourth quarter. we're off to a big start. i'm live from oracle headquarters in san francisco, where i'll be speaking exclusive by with oracle president mark hurd later on in the program. hope you'll stay tuned for that. meanwhile, we've got to talk about this big rally. i have to ask hurd what he makes of this market. for whatever reason, it keeps going higher. >> yeah, whether that has something to do with corporate earnings, we will know soon enough, momm maria. the dow was up 163 points at one
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time today. at the high of the day, the big gains coming before investors took in fed chairman bernanke's comments this afternoon we've all been talking about. we will have reaction to that address in the q&a session plus the outlook for the last three months of the year in just a moment. first a look at the major averages. a rally on the open this morning, mainly on the report that manufacturing started to grow again for the first time since may. construction spending was not great. that may have taken some of the sheen off this rally today. the dow up. 117 points right now at 13,555. the nasdaq's up 5.25 points. well off its high set in the open this morning. now trading at 3,121. the s&p 500 index up at 1,848. maria? >> good rally leading up to today's comments by federal reserve chairman ben bernanke to the economic club of indiana today. his speech did little to push wall street forward. in fact, the market came off of the highs as the chairman started speaking. the chairman saying he doesn't
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see a recession, but that growth is still too slow to boost the jobs picture. listen to this. >> right now, we see an economy which is expanding. we see employment which is one of the key indicators of recession, still growing. so we expect the economy to continue to grow. that's our best forecast as of now. so we're not expecting a recession. that being said, with an economy growing only sort of 1.5% to 2%, that is not fast enough to lower the unemployment rate. that is my concern. >> all right. we have reaction now to that. and today's big gains in our "closing bell" exchange, plus we're talking strategies for the coming quarter. a quarter that has historically been good for the bulls. with us today, todd of black bay grou group. paul shots of heritage market. and our own rick santelli. paul, i'm going to start with you because you make a bold statement. you feel right now ben bernanke is irrelevant.
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what do you mean in. >> bill, i think the fed's done the most part, they've laid all their cards on the table. if you're playing poker, they're all in. it's qe unlimited. if $40 billion is not enough, they'll go to $50 billion, $60 billion, $100 billion. each qe has had less of an impact. they're targeting the markets. we all know mortgage rates are at lows. the problem is people can't get mortgages. whether they go down another quarter point, it's not going to matter. the fed is all in. they're going to keep going until it doesn't work. the real solution is in congress. i thing k we all now our politicians aren't adults. it's not going to work. >> rick santelli, what do you think? >> which is why -- >> go ahead, maria. >> go ahead, maria. >> no, no, please. >> i told ltotally agree with p. he nailed it.
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here's how weird it was today with traders on the floor and ben bernanke. they were keen on the notion they don't think there's a big return to qe 3, unknown future exit problems. even about things that should be easy to research. for example, he talked about milt freeman and anna schwartz and schwartz helped co-author the monetary history of the u.s., but i was sent by traders, october 18th, 2008, "wall street journal" piece by brian carney that talked about anna schwartz. she didn't agree with bailing out the banks. she didn't agree the problem was liquidity. so she in many ways disagree with a lot of the aspects of qe 3 as early as 2008. >> you know, i don't know how you can say the fed is irrelevant when, in fact, the fed has been the only game in town. you don't have stimulus coming from the white house or congress. if is interesting, paul, that bernanke stressed that the fed's pledge to keep rates low until mid 2015 is not a forecast of a weak economy over the next three
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years. you buy that? why keep rates at these levels then if it's not an indication that we're talking about a tough situation? >> yeah, i think you're right. the economy -- the fed's not telling -- not being totally transparent. they do see a problematic economy. they do see systemic problems with employment. the problem is not liquidity. there's plenty of liquidity. there are geopolitical problems, problems in congress, problems with tax code, the problems in our government, the administration. also, listen, bernanke said -- >> maria, the fact that everyone's saying -- >> we didn't see 2008 coming either. >> the fact that everyone is saying qe is not having any effect means that they really are missing the boat. there was $3 trillion worth of corporate issuance in the year to date so far. $1 trillion worth of bonds were sold by corporations. that reduces, obviously, betters their balance sheets, reduces
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their rates so for the next ten years these corporations are going to be having the benefit of cheap money. 150 or 100 basis points over treasuries to issue cash, that's a great deal. using that money to buy back stock, using that money to pay dividends. tom lee had a great piece that said the outstanding shares of the new york stock exchange are as low as they have been in 1990. what's happening is you have a run-up to qe. the market anticipates that so of course the response is going to be muted to the qe. subsequent months later we then see the market continue to grind higher. so the fact that just because on the day they announced qe there's no big pop in the market is missing the point of what he's doing. >> well, todd, you feel it's still all systems go. you're very bullish on this market still, aren't you? >> that's right. definitely want to go long, bill, and stay there going into the new year. look, what maria said is best. ben bernanke is being proactive,
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only guy being proactive in washington right now. you're missing the boat completely if you don't think qe 3 is going to be great for the bulls. nothing else is out there. 1.3% gdp print. bernanke said it best today. we're not fearing recession but we're close to it, dancing with it. americans right now are waving the white flag. they're giving up. they need something out there. ben bernanke delivered it. wall street traders know it. you can talk about the long-term impact on this, rick, but you know as well as i do this is great for stocks and not great just for the short term but also well into next year. >> hey, there's been a lot -- there's been a lot of lot powerful countries in the world that printed their way into oblivion. >> one more comment. >> fair enough. >> how is it good for the economy? how is printing more money good for the economy? >> well, think about the tesla, it misallocates capital into the wrong places. you give a lot of money, that's low interest rate, easy to get and certainly some corporations have benefited. certainly doesn't seem to dir t
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directdirec directly correlate. >> you sound like a politician, rick, you sound exactly like a politician. you're absolutely right. >> a lot of debate about this policy. a lot of debate about the policy, but no doubt about it, when you look at the equity market -- >> we don't have to worry about the policy until 2015. >> don't fight the fed. we'll see about that. thank, everybody. see you soon. we appreciate your time tonight. >> we have to fight the clock today. have you ever tried to have a conversation with people who are miles away from you all at the same time th? that's not easy. we anchor well together, maria. >> yes, bill. >> 50 minutes left. the 160-point gain on the dow is half gone. 100-point gain right now as we head toward "the closing bell." maria? >> absolutely. we're losing some momentum. stick around. we're just getting started on this huge edition of "the closing bell" today. still ahead on "the closing bell" show me the money, our are fund managers about to pour billions into the stock market
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to prop up year-end performances? plus all that glitters is not gold, especially when the precious metal traditionally melts down. and hurd mentality. the president of oracle wants the world to let the tech giant run the cloud. is this a good idea or just a pie in the sky plan in. and what is it really like to work with the excentric billionaire, larry ellison? that's all ahead on "the closing bell." [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade,
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welcome back. we have about 45 minutes left in today's trading session. let's give you a quick market stat check on the dow jones industrial average which is higher right now, although the early rally is losing some steam after federal reserve chairman ben bernanke defended the fed's loose monetary policy at a speech today in indianapolis. take a look at where we are at the best, dow had been up 161 points. that was the day's high in the morning session, as you can see, just about 11:30 a.m., up 161. now we're losing some of that momentum with the gain as we approach this final stretch of
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about 90 points, two-thirds of 1%. when you look at today's sector leaders, it's energy, financials, health care. all posting sharp gains at this hour. of course, the energy and materials sector were really the pressured sectors going quarter. bill? >> combination of risk on/risk off seconders that are doing well today. no clear direction from that standpoint. we're wondering whether today's market action is a sign of what's to come for the quarter. you saw the statistic earlier that said on average when you have a positive first day of the fourth quarter the dow is up 4% for the quarter. so what's to come this quarter? deborah of "the street" says she feels the market is destined to go higher and points out $22 billion came flooding out of equity mutual funds in the month of august, alone. show she feels that money is going to come flowing back for the investors who feel they missed out on the action, marie w ya. >> is deborah right? could we have this market meltup continue?
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cnbc contributor abigail doolittle suggests taking money off the table in the face of these gains. deborah, let me kick this off with you. you're a believer here. you think we're going to see a market meltup going into year end. what happened in august then? i mean, what changed that all that money came out of funds in august? why do you think it's going to play catchup here? >> maria, i think everyone bought into september being that bad month. they wiere all scared and pulle out. we didn't have the selloff they were expecting. we started to see from libra, i looked at their numbers, most is coming into the equity etfs, not equity funds, themselves. they're starting to tiptoe back in. you have so many portfolio managers that said i'm going to wait until the big, bad day in september when everything sells off then going to buy and they didn't get their chance. >> abigail, not only to you feel a meltup is not coming, you want to take cash off the table. >> actually there was a recent survey of money managers who suggested the number one fear
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out there is actually the fiscal crisis, replacing the european crisis. that's pretty dire. if the fiscal cliff is not resolved by january 1st, there's many indications that the country will fall back into recession. it could take a percentage point off of gdp and cost as much as 1 million jobs next year. and when we think about what's happening with the markets right now, we're at the top of the range on all of this fed and central bank liquidity euphoria. once the psychological effects of that artificial stimulus wear off, we're going to be dealing with reality. that includes qe 3 for the first time analysts are looking for a quarterly decline in earnings since qe 1 of 2009 when we were actually in a recession. the european crisis. and, again, that fiscal cliff. i mean, it's pretty scary to me. it's hard to see us breaking out of the range unless those realities resolve themselves. >> well, you know, abigail, you're one of those people who are looking at fundamentals, but the fundamentals really haven't
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mattered. i wrote a whole piece on cnbc.com today about the fourth quarter and the earnings season and how we are going to see negative earnings. this market is not trading on fundamentals. it's trading on central bank easing and not fighting the fed. so what's the catalyst to get people to focus on fundamentals, if, in fact, you're right? >> first of all, i read your article today, maria. i really thought it was spot on. i think your question is a great one. what will cause investors to start looking at the fundamentals? i have to think it's going to be the unexpected. we have a payrolls report coming up. payrolls have been very spotty this year with, you know, a number of reports under 100k, around this 100k number. it's not enough to move the market higher. also, you know, these sort of recessionary level ism numbers both on the manufacturing and ism. so in terms of what's actually going to be that catalyst, i tend to think it could be the unexpected. this year is reminding me of 2011 leading into the debt ceiling crisis. here we have this -- we're leading into the fiscal cliff
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crisis potentially. chalky sideways trading, uncertainty. you know, the technicals don't really support this kind of breakup to the upside either. transports are unable to confirm, you know, the dow moving to the upside. we're also looking at the commodity complex starting to break to the downside. so -- >> we are seeing the markets drifting south here. the dow is up just 80 points. half the gains we had earlier. the nasdaq turned negative this point. i want to ask you, deb, what about that? that idea of this disconnect we've been highlighting recently between the fundamentals which are not getting any better, and the market which has been getting better? i mean, does the rally -- is the rally justified by the fundamentals right now? >> it is not about fundamentals and that's the thing. >> how can it not be about fundamentals? >> you can't fight the tapes. the market is up 14%, the s&p is up 14% this year and this is the year that everyone has said, oh, it's going to be horrible this year, horrible this year and here we are at 14%.
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i bet you anything if we get one more percent added to that, they're going to think -- are they going to miss that party? they're going to join. >> ladies, thank you both. we'll see you later. the market is heading lower right now. the dow as we said with half the gains it had, but where has the strength been today? jackie deangelis has that for us, it's ibm. >> you're exactly right. it's ibm. it's the second best performer on the dow hitting all time highs within the session, up $3.34. it's because deutsche bank raised its price target on the name by 7%. we're seeing a pop in the stock. big mover today ibm, 210 spot, 91 right now. maria? >> it's amazing, jackie, ibm has been one of those companies that has been able to thrive in all sorts of economic environments. very tough to do in an inno investigation, economy, bill, and where technology moves so
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fast. as so many of us are witnessing with oracle and its innovation. we have 35 minutes before "the closing bell" sounds. market is higher but well off the highs of the day. hasn't just been stocks making high today. gold hit a nearly one-year high earlier this session, despite beginning what is historically the worst month for the precious metal. will this october buck that trend? we'll look at that coming up. then later on, congress may be on break, yet again, but at least somebody is working on our debt problem. and they claim their solution cuts more than hitting the fiscal cliff would. would be a lot less painful. how's that possible? they're here to explain. stay with us on this. back in a moment. [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.
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welcome back. the market is off of the highs across the board right now. we are still seeing gains in the dow and s&p 500. as you can see here. nasdaq negative right now. meanwhile, commodity prices rallying along with the stock market today. sharon epperson is at the nymex with that angle. >> the biggest gain eer commod y commoditied today was natural gas, almost up 5%, nearly at $3.50 right now. the big gains we're seeing in natural gas, a lot of traders early in the session attributing it to colder weather forecasts out there for the rest of october. but some traders saying it looks like at the start of the quarter, a lot of folks wanted
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it to be in natural gas instead of crude oil and made that allocation early in the day and continued the momentum buyers coming in. heavy volume in this. we're seeing five straight days of gain. phil. >> thank you very much. gold today moved higher. it hit an intraday high earlier this month, though it's considered the worst month for the metal on average. fourth quarter has been the best three months for the s&p on average going back to 1980. which do you want to own for the rest of the year? i feel like i'm leading the witness here. gold or the broader stock market in let's start talking numbers on those two. technical side, carter worth. on the fundamental side, john stevenson, with first asset investment in toronto. carter, you brought a rather long-term chart. >> sure, i did. >> to make your point today. >> right. actually we're on the side of the s&p here. just for fun -- >> you'd pick stocks over gold. here's why. >> here's the very long-term
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chart. it starts when the s&p was first conceived. >> what is this no. >> this is the ratio. simply taking the price of gold as it relates to the price of the s&p. one unit of gold, one unit of the s&p. the denominator changes or the numerator. in this case gold gets five times the price of the market. it's a function not so much of gold, but stocks collapsing in the '30s. >> when this chart goes higher gold was outperforming stocks. >> this is a function not only of gold, but stocks were terrible in the '30s. when the ratio spikes again in the '70s it wasn't so much stocks, but gold was really surging. that was the record high. right know we're about 1.2. the average if you take all this is about 1.5. it's not that out of skew in terms of where it's been historically. the eye wants to see this optically, at least mine does, that that's a big bottom. >> then going up again. >> performance for gold. >> you don't think that's going to happen? >> we don't think that's going to happen. >> why not? >> it's the way the gold stocks are acting.
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they're struggling of late, compared to the robust, consistent nature of the way the s&p is performing. >> betting stocks over gold. >> what about you, john? which is a better buy? >> i think stocks are a better buy. gold goes higher but in the short run i wouldn't touch gold with a pole. all the good news that would be supportive of gold, namely qe 3, the ecb and the bank of japan is already in it. i think ultimately you'll see it fall. i'd look to re-enter that trade after the u.s. election. that's when historically gold and gold equities do well. >> you're talking short term. what about the longer term possible inflationary implications of the very -- the move by the ned to keep rates as low as possible right now? isn't that considered inflationary? wouldn't that be good for gold, long term? >> yeah, absolutely. so if you're looking out 12 months i think you see gold pass $2,000, up, for sure. that's certainly going to happen. if you look at the fmoc meetings from the last meeting, they basely said they're talking off the inflation story. in fact, inflation news or the
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story would be great for the market. great for gold. >> in the meantime, both of you like stocks over gold. i'll let you -- i'll let you gold bugs out there draw your own conclusions on that one for now. maria? >> bill, thank you so much. we're well off the highs on wall street as we approach this final stretch. i want to show you apple. part of the reason the market is coming off the highs is because of a decline in apple. take a look at where it is now. down better than 1% at the lows of the afternoon. the dow jones industrial average as a result coming off of a rally of 161 points earlier. now showing a gain of just 60 points. we've given up about 100. nasdaq is negative due to the weakness in apple, down about 10.5 points. is this a fed-fueled bubble that's destined to end bad sfli that's next. we'll take a look at this market. he engineered hewlett-packard's comeback when he ran that company. how does oracle's president mark hurd plan to turn around slumping hardware sales at
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welcome back. the dow industrials rallying today up about 70 points even though it is off of the best levels of the afternoon. the nasdaq really struggling. bertha is at the nasdaq with the details. >> the nasdaq was up as much as 30 points earlier in the day. as you mentioned before the break, it's really the weakness in apple, also greater weakness in microsoft. microsoft today getting cut over at rbc. they basically see the windows 8 upgrade price priced into the microsoft price. google, oracle, with the oracle world today, the real strength. take a look at google. google has really been coming on here. google today set to close at an all-time high after setting an all-time intraday high of $765. bill, new pew research shows that android is really gaining strength when it comes to
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tablets. >> they've had clever commercials lately. thank you, bertha, very much. the dow is losing steam into the close here after shooting higher like a rocket to kick off this first day of the quarter. earlier some attributed part of the rally to what chicago fed bank president charlie evans told our steve liesman this morning on cnbc. listen. >> in my opinion, we'd continue with the asset purchases until we see payroll employment more like 200,000, 250,000. >> you're saying continue at 85 billion into all of 2013? that would be your recommendation? >> this is my recommendation. >> so is the fed's bond buying spree fueling the markets and should we be worried it won't last? that's what we're talking about right now. eric is with us of gerring wealth management. he says yes. gary clark says be defensive knew, expect a rally after the election. thanks for joining us. harry, why do you expect a rally
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after the election? we'll get nr clarity then? >> that's one thing. the uncertainty is the death of the market. i think we're going to get a correction first. the market is tired. the tired gain of last month was two days. ecb day and qe forever day. that's not good for the markets. the market needs a correction. think now anywhere from 5% to 8% will do it. a lot of money out there waiting to get in the market. they missed it. that's a lot of reason a rally. a lot of money that missed the market rally this year. they're going to find it. >> in fact, eric, you're the opposite of harry. you think yewe're going to see rally now then you're bearish longer term. why? >> if you look back at the market pattern, qe 2, for example, you know, there was a strong rally and anticipation of qe, but once the policy was actually put in place, the market paused. it had to digest the receipt of qe. that took about two or three weeks. we're seeing the same type of thing play out this time around. market anticipating it. and now that it has it, it has
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to kind of go through a processing of receiving qe. but once that's in place, it wouldn't be surprising to see the market rally for the rest of the year. certainly there's uncertainty out there, with the election, and the fiscal cliff at the end of the year, but whenever the market had qe in the past it's always shown the power to drive through that and move higher. >> gentlemen, let me get your takes on really what the areas of this market that will be the beneficiaries of some of these trends that you're talking about. on the one hand, the meltup, harry. what stocks aor groups do you think are going to be chased the most if the large pools of money are chasing beta, chasing the performers? on the oatherther side of the c what about the fiscal cliff? where are the areas of the market that are most vulnerable for the spending cuts coming? >> of course, in terms of the melt-up, the aggressive areas. the stocks, semiconductors, technology, energy, materials,
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commodities will all benefit from a melt-up. after the correction we see coming happens. for the fiscal cliff, you know, the fiscal cliff has become a fiscal hill. the congress cannot afford to have $1.2 trillion leave the economy overnight. it's like making the gas price $10 from today to tomorrow. it cannot happen. the congress will do some things to solve that. they'll kick it down the road again and we'll solve it piece by piece. the fact we're going to solve it piece by piece will be positive for the economy and the markets long term. >> you know, eric, here we are again. we're doing a segment about the stock market and we've gone this long into the segment without discussing that which you would think matters the most to the markets. the fundamentals. corporate earnings. economic date data. we haven't gotten to that point. doesn't that matter in the scheme of things? >> some point it will matter. in the near term it may not. the market will push higher on the qe euphoria. the one thing that's troubling,
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the fed is essentially all in at this point. we if we start to see a -- like qe 2, it topped out 4 1/2 months before the end of qe 2. if we see stocks top out and there's a sense there's no further benefit from that and the market has to turn to fundamentals, there's effectively nothing there to support it. gdp growth has been declining. corporate earnings are slowing at a time when margins are at peaks. all of those things point to a declining stock market. without the support of qe we could easily see a market in a 15% to 20% correction in short order. >> all right, guys. >> so how long does this fed-fueled rally last then, eric? when do the fundamentals come into play? when i say that, i mean the contraction we're looking at for the third quarter earnings season. >> i think 2 1/2 months is reasonable depending on how the fiscal cliff plays out, assuming they extend that. i think other asset classes have more fundamental support like gold, silver, mortgage-backed
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securities and tips. >> gentlemen, thank you both. good to see you. we're out of time. >> thank you. >> take care. in fact, maria, whatever is fueling this rally has been losing steam today. up just 72 points now as we head toward the close with the dow trading higher but not nearly as high as it was and the nasdaq is negative right now. all right. we're going to focus on earnings next. will earnings derail this market? why some aren't so optimistic on what we'll be getting on the front in this quarter. maria's look into the world of oracle with the company's president, mark hurd. he's making big claims that oracle will eventually run the cloud. plus we'll get his take as former hewlett-packard ceo on how meg whitman is doing her job a year into her position. we're back with more in just a moment. but first before we go to break, the dividend. which company's stock is the biggest lagger this year? activision blizzard, dell, or
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just before the break, as part of the dividend, we asked which company's stock is the biggest lagger this year? activision blizzard, dell, or staples? now the payoff. dell, which has fallen about 30% year to date. all right. maria, we're waiting for earnings season to again in earnest next week, but already 21 companies have posted results for the third quarter. so we're getting a peek at the way things are coming in. according to key private banks, here how we stand so far. the companies that have reported earnings have seen growth of 7.5% compared to growth of about 9% last quarter. average sales of these 21 companies so far, coming at 1.4% compared to growth of 4.6% back in the second quarter. so we are seeing a slowdown so far, right? >> yeah, and that revenue number, bill, is really critical because you're not seeing
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end-market demand pwhen you tal about revenue up 1.4%. are we already seeing signs of weakness many are predicting? will it catch up to the markets? we bring in nick from key private bank, ryan from bimo capital market and our own bob pisani. gentlemen, good to see you. thanks for joining us. nick, if in kt end it's all about earnings, will the markets have a problem given the fact what we're seeing looking at the revenue side of the equation? >> the rate of growth is clearly slowing both on the sales and the earnings front. it's also a game of expectations. for the third quarter the expectations, we've been joking around saying expectations are zero for the quarter since there are no expectations for growth. we think it's going it come in more 4%, 5%. we think the majority of companies are going to beat. the important thing here, we think the expectations for the fourth quarter are too high. while they're too high, we think a majority are going to lower fourth-quarter guidance after reporting. not by the same magnitude as what was last quarter. the cuts are going to come but
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not be as severe as last quarter. >> brian, what do you think? what are your expectations for earnings going into this quarter? >> they're going to be weak. that's already baked into the market, though. so many investors -- >> you think it's in the market, as we sit here with near 4 1/2-year highs? >> yeah, because the earnings part of it, people are not buying stocks based on earnings, bill. >> yes, i think we've established that today. >> and it's already known that earnings are going to slow, private markets are peaking. we know all this. >> what's wrong with that picture? shouldn't they buy based on earnings expectations? >> we live under a simple premise, stocks lead, which lead the economy. we're clearly above both of those things. we're leading not on fundamen l fundamentals. we're right for a near-term correction. i think it's dangerous people coming on talking about short-term corrections. longer term the health of the market looks well. we're bullish on 2013. have been bullish the entire year of 2012. >> do you expect earnings growth to pick up? >> we expect multiple expansion to continue to drive the market.
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that's what's going on, bill. i think that's what most people are missing. i think 4% to 5% earnings growth for this quarter is doable and the next quarter earnings are going to be worse. >> maria? >> i was talking, bob pisani, to doug kass who of course is putting money to work in this market on the short side. in particular. and i asked him that question. when are fundamentals going to matter again? he said when the stock market doesn't work anymore. that's when they will matter. when people feel that it's just not working. that even though they are putting money to work in the market, the market is not responding. when that happens, we don't know, but at some point fundamentals matter. >> yeah, well ult mattly they still do matter. i agree the markets have been distorted by qe, marie wra. on the earnings, nick has it right. earnings has been slowing down but have been spectacular in the last two years. 2010, earnings of the s&p were up 38%. 2011, 16%. of course they're going to come down. the low-term average growth i think is 7%. if we get growth this year, it's
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not like the last few years but it's still growth. we probably get something similar next year as well. the question is, is qe 3 the earnings trough? can you talk to that, guys? nick, can you address that issue? i'm a little bit concerned about the weight of financials for the fourth quarter. we're expecting big numbers from them. if they don't come in, we could see fourth quarter disappointments. >> yeah, that's right, the fourth quarter is expected to pick up to have about 9% or 10% earnings growth for that period. led by the financials. we think that number is going to come down, and the more realistic number is going to be about 6% to 7%, right around that long-term trend. then we think the number can stay in the high single digits to low double digits into the first and second quarters of 201337 when people ask us why, we say we give them 9.5 trillion reasons why. that's what we're estimating, central bankers are theoretically pumping into their economy. >> very quickly, we're going to o run out of time. let's make it meaningful to
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investors. give me one sector you'd buy or one strategy. >> dividend growth by far. >> still like that. >> dividend growth by far, the longer term trajectory with companies with great cash flow and increasing their dividends. that's the best thing investors should be buying. >> defensive. okay. nick, what about you? >> the qe 3 trade, financials and home builders. don't fight the fed. they want to prop it up. go with those earnings and cash flow. >> i'll get your comment on that coming up. guys, thank you for joining us. preesh appreciate it very much. we are heading toward the close here. 15 minutes left. we seemed to find a plateau, mar marie ya w the dow up. the nasdaq is led lower by apple today. next up, sheryl sandberg speaking to cnbc's julia boorstin for the first time since the company's ipo mess. >> we said it a bunch of times. as mark said, we're disappointed in the stock price but we have to focus on moving forward of how we build a business. >> is she helping to win over
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skeptical investors? we'll check it out. also speaking of facebook, is mark zuckerberg as we've never seen him before, in a suit? what is the world coming to? what was the occasion? we'll find out, coming up. he didn't even wear a suit for his wedding. smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. which can withstand over three and a half tons. why they have a raise your rate cd.
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all right. there is mark zuckerberg wearing a suit. i joked before the commercial, that zuckerberg didn't even wear a suit before, during his wedding. and maria, i stand corrected. one of our production staff went to the internet. >> spoke too soon. >> and found a picture of mr. zuckerberg at his wedding wearing a suit. he's wearing it for the second time. i stand corrected. >> that was the meeting with the prime minister of russia, medvedev. so woel learn why that meeting took place coming up. the fourth quarter is starting off strong after the manufacturing sector unexpectedly expanded. we are well off the highs of the day. certainly for this market. >> so is the start of a big fourth quarter rally or not? or could october turn into the horror fest we've seen in the past for the bulls? with us, our friend, gordon, cnbc market analyst from rosenblat securities. we've lost altitude going to the
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close. what are your expectations for this month that usually has a cloud over it and for the fourth quarter? >> yeah, bill. we've been getting around 14, 16, top heavy at that level on the s&p. notwithstanding, bill, this is a performance -- as clear as any as i've ever seen. look, last year they took them and fell back and guys long only hedge funds were reluctant to get caught again. this year they're in trouble. you find these guys now struggling to buy the dips. they've got to get invested in stocks. >> right. >> and beyond that, bill, we've seen tremendous appetite for corporate issues that have come out. so september was a record month. so what does that translate to? all these companies are going to have excess capital. that will mean buybacks and also help support stocks. so if you're ask me what i think the landscape, i think it continues to trend upward, bill, through the end of the year. >> yeah, that's a great point, gordon. because that's one of the reasons that, you know, the expectations for financials are so high. because there was a lot of lbo transactions in the last several months. you had lots of deals coming to
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market. so they're expecting, the analysts out there are expecting the financials lead the earnings parade back in the fourth quarter. what are you seeing in terms of deal flow on the ground and also what are you seeing in terms of the pools of money chasing stocks? can you give us only color on that given you're on the floor and really seeing the flow? >> yeah, that's very true, maria. financials, the one sector were looking to lead us out of this thing. a lot of guys were saying, we have a backdrop of qe 3, so if we don't get the kind of data we're looking for, we know we're going to get supported on the downside, so we don't have a lot of things to worry about. so the financials are leading us. that being said, there are some sectors that have been a little bit weaker. overall, you're seeing people get interested, deals are being made here. the hedge funds, the long onlies, are clambering to get on board. any time you see a dip, they're jumping on. 1420, 1430 on the low end of the s&p. >> okay. gordon, thanks. see you around on the floor here. >> thanks.
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we'll take a short break and get the closing countdown right after this break. stay with us. also, we all know the clock is ticking on the fiscal cliff. somebody in washington is working on an alternative to the massive spending cuts and tax increases that the fiscal cliff would bring. and it's not in congress that they're working on this we'll talk about it coming up. plus, the interview you don't want to miss. my exclusive sit-down with oracle president mark hurd. we'll get this strategy on owning the cloud and get his take on what's happening at hewlett-packard, his old job. can meg whitman turn things around? we'll talk about that. plus oracle open world. you're watching cnbc. first in business worldwide. estn common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level.
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they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. okay. five minutes before the close. look at this chart. a thing of beauty. we have jackie deangelis on more of this rally for kft. >> that's right. take a look at the stock. it's having a pretty good day, up 2.5%. it's hitting a ten-year high, on the last day of trade before it's going to break up. this afternoon after the close, it's going to spin off the north american grocery business. we're going to see two separate trading companies there. for right now, kft in its last
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stages seeing a nice pop today. bill? >> thank you very much, jackie deangelis. moo r maria, we have them coming out of the woodwork. another viewer sending us a photograph of mark zuckerberg wearing a suit. this time he's shaking the president's hand. okay. he's worn a suit three times in his life. if you have more photos of mark zmark mark zuckerberg in a suit, send them to maria. it was a two market day if you will, had a rally on the open, the euro against the dollar. the euro coming off a three-week low on the construction numbers and the manufacturing data this morning. then it has just been a slow roll south the rest of the day. watch this chart pattern. you're going to see it again with the dow. which was off to the races this morning. we had that 161-point gain then we move sideways and we're well off that high of the day. the yield on the ten-year was
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very interesting. we saw it skyrocket on the manufacturing data as they sold treasuries but since then, this led the market decline earlier in the day, maria, and we're down to 161 on that ten year. only much the same. kind of a story today. rally on the open, sideways to the close. to $92.31. we mentioned earlier how gold hit its year's high on the open this morning. it got up to 1,792 and change and went south again. we're at 1,777. one more, the volatility index, goes the other direction. the fear factor was lower on the open this morning. it's near the high of the session now with a gain of 4%-plus. so you wonder, maria, to start this fourth quarter, what the headline is right now. are we off to a good start? or do we talk about this selloff that we've seen going into the close today? >> well, it feels like it was a good start to the quarter, no doubt about it. i mean, 70 points is 70 points on the dow jones industrial
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average, but i think there is a looming feeling out there that earnings will matter and we're about to get a whole slew of earnings. we're going to really get the companies on the front lines. the alcoas of the world, the financials of the world, who really tell us what end-market demand looks like. i believe that dictates activity going into year end, but i totally agree that these managers chasing stocks have been a main factor, a big factor, and probably will continue to do so. >> big performance. >> until they bump up against the fundamentals and that is earnings. >> i'll be interested to hear mark hurd's view of the economy from his standpoint. they're doing okay now at oracle because there's still growth in areas of technology right now, but with his customers i'll be interested to hear what he has to say about their order flow right now, won't you? >> me, too. you know, 50% of the business comes from outside the united states. we want to get his take on europe for sure. oracle has been a star performer. no doubt about it. stock up 25% year to date. the problem is you have upstarts coming trying to eat their lunch in a number of ways trying to
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take market share with big data because you've got so much data that has changed from tradition data to things like smart swpho and biotech data. they need to get the market share back. we'll see if he'll be able to do it. >> see you in little bit, top of the hour for the second hour of "the closing bell." let you get ready for that. meantime, defensive nature to the sectors that did well today led by consumer staples and health care, energy, then the financials that were leading earlier in the session. brian belski, you don't consider your play a defensive play that you like right now. in the categories where you like the dividends, where do you like? consumer staples? where do you play it? industrials? >> we're overweight staples, industrials, tech and energy because those are the companies with great cash flow, great earnings consistency, oh, by the way, many of those companies are growing their dividends. it's a great kind of wrap-up it up into one party. >> the key is dividend growth. great to see you. that is first hour of "the closing bell." don't go

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